Uniti Group Inc. (UNIT) Q2 2025 Earnings Report, Transcript and Summary

Good morning, and welcome to today's conference call to discuss Uniti's Second Quarter 2025 Earnings Results. My name is Gigi, and I'll be your operator for today. Today's call is being recorded, and a webcast will be available on the company's Investor Relations website, investor.uniti.com, beginning today and will remain available for 365 days. [Operator Instructions] It is now my pleasure to introduce Bill DiTullio, Uniti's Senior Vice President of Investor Relations and Treasury. Please begin.

Good morning, everyone, and thank you for joining today's conference call to discuss Uniti's second quarter 2025 results. Speaking on the call today will be Kenny Gunderman, our CEO; and Paul Bullington, Uniti's CFO. Before we get started, I would like to quickly cover our safe harbor statement. Please note that today's remarks may contain forward- looking statements. These statements include, but are not limited to, statements regarding Uniti's fiber build strategy, the business' growth potential, efficiencies from the debt silos combination, Uniti's 2025 outlook and other statements that are not historical facts. Numerous factors could cause actual results to differ materially from those described in the forward-looking statements. For more information on those factors, please see the section titled Safe Harbor Statement in the accompanying presentation and the Risk Factors section in our filings with the United States Securities and Exchange Commission. With that, I would now like to turn the call over to Kenny.

Thanks, Bill. Good morning, everyone, and thank you for joining. We're very pleased to have closed our merger with Windstream. When we announced this combination in May of 2024, we talked about how fiber is the mission-critical connective tissue for all current and future broadband delivery. Since then, we've not only seen a validation of that thesis, but an acceleration of positive themes that reinforce our views. Since our announcement, for example, 4 of the largest wireless carriers in North America have begun investing heavily in fiber-to-the- home, and we believe that investment will continue. With Kinetic, we own one of the most strategic independent fiber-to-the-home platforms remaining. And with a focus on Tier 2 and 3 markets, our footprint has substantial first-mover advantage is with fiber. We've also seen the dramatic emergence of the hyperscalers as massive bandwidth hogs, and Uniti is one of the few truly national wholesale providers able to support their growth and scale. Importantly, with our close to 5 million connected fiber endpoints by 2029, we will be substantial beneficiaries of the AI inference phase, which is fast approaching. Lastly, since our deal announcement, we've seen a material improvement in the regulatory backdrop for fiber providers, including copper-to-fiber conversions. The FCC has taken a much more commercially favorable position towards copper retirement and a more business-friendly view of communications regulations in general. Many of our state PUCs are following their lead. So with that, we could not be more pleased with our transaction and how well positioned we are as a premier insurgent fiber provider. Before jumping into the quarter, we want to spend a little more time on prepared remarks than normal in order to give a refresher of new Uniti. Starting on Slide 4. First, we are going to accelerate our investment in fiber and expect to pass 3.5 million homes with fiber within the Kinetic footprint by the end of 2029, and we have no plans of stopping there. We also expect that about 75% of our total revenue will be fiber-based by 2029. That conversion to fiber will further fuel the strong core fiber revenue and EBITDA growth we saw during the second quarter. The proven success of fiber-based products, especially when you build first or early in a market like we're doing at Kinetic and Uniti Fiber allows for predictable, steady growth with increasingly improving churn. Our aggressive management of legacy products and services will allow us to eventually achieve stable consolidated revenue and adjusted EBITDA growth. Our mentality and go-to- market strategy will be that of an insurgent share taker with industry-leading NPS scores and a focus on network quality and customer obsession. We believe long-term blended penetration of 40% is not only achievable, but looks increasingly conservative. Slide 5 shows key metrics we plan on presenting each quarter. We currently pass 1.7 million homes with fiber within our Kinetic footprint, and we expect to be at 2 million homes by the end of this year and 3.5 million homes by the end of '29. Even before taking into account our enhanced build plan, our percentage of total revenue on fiber is already around 40%, and we expect that to increase to roughly 75%. Also, the percentage of total revenue that comes from our core business, Kinetic and Fiber Infrastructure is 80% today and growing to 90%, providing a substantially future-proofed business. As demonstrated on Slide 6, the growth in each of our core fiber lines of business has been very strong, and we expect that to continue given the indisputably superior nature of fiber. Given this pace of growth, fiber will soon overtake legacy services as the majority of our revenue and EBITDA. It's important to highlight on this page that we will face headwinds from legacy services that will weigh on consolidated revenue and EBITDA. With that said, I'd like to highlight 3 points. First, these services in no way diminish the value of our core fiber business. Secondly, within a relatively short period of time, the mix shift to higher fiber revenue will make the legacy services increasingly immaterial. And thirdly, in the meantime, these services are generating predictable free cash flow. In order to grow, we have to take market share, and our insurgent mentality is reinforced by very strong NPS scores as shown on Slide 7. We're obsessed with customer satisfaction. And as a result, our industry-leading churn is our superpower. On a go-forward basis, as we transition the majority of Kinetic's footprint to fiber, we'll also start to see material improvements in churn. Finally, we believe we have the right leadership team in place to capitalize on the opportunity ahead, as highlighted on Slide 8. Our collective experience spans successful copper to fiber conversion stories like Frontier and Ziply as well as wholesale and enterprise fiber. And of course, we have substantial strategic and M&A experience for the exciting road ahead. Going forward, we will report our results in 3 segments. The first is Kinetic, which is our fiber-to-the-home platform. Second is fiber infrastructure, which includes Uniti Fiber, Uniti Leasing plus Windstream wholesale. And our third segment is Uniti Solutions, which is the business formerly known as Windstream Enterprise. Starting with Fiber Infrastructure on Slide 10, you can see we had a solid quarter of pro forma Uniti and Windstream consolidated bookings of $1.2 million of MRR. As we foreshadowed, wireless bookings have been a highlight, up 30% in the first half of 2025 compared to the first half of last year. Our anchor lease-up strategy within the Fiber Infrastructure segment will not change going forward. And in fact, the economics when combined with Windstream Wholesale track right in line with our expectations. Importantly, the hyperscaler deals we are pursuing on a consolidated basis are not only in line with these economics, but are tracking ahead of our expectations. As demonstrated on Slides 11 and 12, we have terrific potential in this segment. The chart on the right side of Slide 11 is frankly dated as it shows the industry growth expectations before the hyperscalers theme emerged in earnest. Our new combined wholesale fiber platform not only has an expansive high strand count network to sell with unique metro markets and intercity routes, we also now have capabilities to sell a more robust product set of lit and dark fiber. As you can see on Slide 12, we have an immediate and materially enhanced set of customer MSAs to now sell that larger product set into. In fact, on August 1, Windstream signed a 20-year IRU with a major hyperscaler that spans approximately 500 miles on existing intercity network. The total contract value is approximately $100 million. This is a deal that we've been working on together for some time and would not have been possible without Uniti's network and Windstream's relationship with the customer. This cross-selling opportunity is exactly the type of deal we've been foreshadowing, and we expect to see more in the near future. That's a great segue to our wholesale sales funnel on Slide 13. On a combined basis, our hyperscaler funnel represents about $1.5 billion of total contract value. At Uniti alone, hyperscalers have increased as a percentage of the total funnel from less than 15% a year ago to now 40%, and that's on a total funnel that's increased 80% since 2Q '24. The activity of both companies alone has been very strong, but the closing of this deal is an accelerant, and we expect a nice ramp in the second half of '25 and certainly into '26. Turning to Kinetic. This segment will now include all consumer, wholesale and enterprise customers that are located within the ILEC footprint. As Slide 15 illustrates, consumer represents about 60% of total revenue and is expected to grow to about 75%. And although fiber-based revenue within Kinetic today represents a minority share of total revenue, by 2029, we expect that to be about 85%. As I said earlier, this shift to fiber will result in growth, lower churn and therefore, predictable revenue and EBITDA. Slide 16 shows the cadence of our accelerated fiber build. As a reminder, Kinetic has built a substantial amount of fiber-to-the-node over the past 10 years and building that last mile can be done both cost efficiently and in a timely fashion relative to many of our peers. Also, it's important to point out that the 3.5 million homes that we're passing does not include BEAD nor any out-of-territory builds. We think there's a terrific opportunity to build fiber-to-the-home, utilizing our existing metro-rich Uniti Fiber footprint. And taken together, we see a clear path to up to 4 million fiber homes over time. More to come on that in the future. Turning to Slide 17. As we've now demonstrated at Uniti over the years, if you build fiber first or early to Tier 2 or 3 markets, you have the right to win for many years into the future, and that same strategy is being implemented at Kinetic. 80% of Kinetic's footprint has either one competitor or less, highlighting the competitive dynamics of Tier 2 and 3 markets. I mentioned it earlier, but Kinetic's footprint represents one of the last remaining scale platform opportunities to be first with fiber. Also, as you can see, only 60% of the footprint has a national cable provider that's offering a fixed mobile bundle. And we believe that's one of the real highlights of our footprint. Speaking of the bundle, turning to Slide 18. As we've talked about in the past, we think a wireless bundle at Kinetic today is a nice- to-have, but not a must-have. As this slide demonstrates, we're seeing terrific success thus far with our existing wireless bundle partnership with AT&T with 18x quarter-over-quarter fiber subscriber growth and approximately 50% improvement in churn for those subscribers that bundle. So while we do not think a bundle is critical, it does demonstrate the benefits of the conversion theme we're seeing in the industry. And we think this provides tremendous upside by combining Kinetic with a more robust bundle in the future. I mentioned the favorable regulatory road map earlier at the FCC, but that's also true of our state PUCs. Of the 18 states comprising Kinetic's footprint, 9 have eliminated COLR obligations with deregulation and expanded access to advanced technology. In the remaining 9 states with COLR obligations, we have the flexibility to provide voice services using the technology of our choosing, such as fixed wireless or fiber-based VoIP solutions. So as Slide 19 highlights, by 2029, we believe that over 95% of our customers will be on fiber-to-the-home directly or through alternative technologies like fixed wireless that leverage our substantial fiber-to-the-node investment. We think this is one of our key competitive and strategic advantages, and we'll elaborate more on that in the future. Turning to Slide 21. Before I turn the call over to Paul, I want to talk about Uniti Solutions, which is a robust nationwide managed services provider to Fortune 100 enterprise customers across the country. As I mentioned earlier, this business is not part of our go- forward fiber infrastructure strategy, but it is still a very good business that generates a substantial amount of predictable cash flow. While both revenue and EBITDA are declining, weighing on our top line, as I mentioned earlier, a critical part of our strategy is to retain the most profitable part of this business while maximizing cash flow. We will largely exit TDM by the end of this year. And we believe many of the customers we plan to retain will be huge bandwidth users from AI-generated products when the infra space begins, giving us a potential opportunity to move these customers to fiber. Also, we believe some of the managed services products within this segment can be cross-sold into our Uniti Fiber enterprise base as well as into the Kinetic enterprise base. Taken together, we believe all these things will flatten the decline of this business by 2028, resulting in an NPV of over $1 billion of enterprise value. With that, I'll now turn the call over to Paul.

Thank you, Kenny. Starting on Slide 23. 15 months ago, when we announced the planned merger with Windstream, we laid out our key pre-close priorities. Through the dedication and collaboration of our combined teams, we have completed nearly all of those objectives, including our go-forward operating plan, the collapsing of the debt silos and the full redesign of the Kinetic fiber-to-the- home build plan. And we are now set to hit the ground running at full speed as one company. Please turn to Slide 24, and I'll touch on some of the key second quarter highlights for both Kinetic and our Fiber Infrastructure segment. As a reminder, our fiber-to-the-home platform will continue to be branded as Kinetic. Fiber infrastructure will include our current Uniti Fiber and Uniti Leasing segments, along with the Windstream Wholesale segment, all of which are highly complementary and will combine to create a premier fiber infrastructure company with both national and deep regional capabilities. We are also now referring to the Windstream Managed Solutions segment as Uniti Solutions. Both Uniti and Windstream made good progress this quarter on several different fronts. Starting with Kinetic, we expanded our fiber network to pass an additional 52,000 homes with fiber, ending the quarter with 1.7 million homes passed. Kinetic also added 19,000 fiber subscribers during the second quarter, ending the quarter with 483,000 total fiber subscribers, a 15% increase from the prior year period. As Kenny mentioned earlier, total fiber revenue for Uniti and Windstream increased 10% year-over-year during the second quarter, with Kinetic consumer fiber revenue alone growing 27%, which is consistent with the growth rate we've seen for multiple quarters now. This growth is being driven by strong adoption of our fiber-to-the-home product, bolstered by the performance of our Fiber Fast Start and Fiber Forward initiatives at Kinetic that target our newer and more seasoned cohorts, respectively. At Fiber Infrastructure, Uniti and Windstream combined to record consolidated bookings MRR of approximately $1.2 million, with Uniti contributing $0.8 million of MRR to that total. This level of bookings at Uniti is consistent with the past several quarters. Slide 25 highlights the sustained momentum we are seeing within Kinetic Fiber. Fiber penetration was up 20 basis points sequentially and 120 basis points year-over-year, while fiber ARPU increased 6% sequentially and 11% year-over-year. Turning to Slide 26. I'd now like to cover Uniti's stand-alone results for the second quarter. Uniti reported consolidated revenues of $301 million, consolidated adjusted EBITDA of $243 million, AFFO attributed to common shareholders of $96 million and AFFO per diluted common share of $0.36, all of which were ahead of our expectations. As we mentioned previously, analyst consensus estimates for stand-alone Uniti were too high for the second quarter and too low for the second half of 2025. At Uniti Leasing, we reported segment revenues of $226 million and adjusted EBITDA of $220 million, representing an adjusted EBITDA margin of 97% for the quarter. During the second quarter, Uniti Leasing net success-based CapEx was approximately $2 million as GCI funding for the calendar year 2025 was fully satisfied during the first quarter. At Uniti Fiber, we reported revenues of $74 million and adjusted EBITDA of $29 million during the second quarter, resulting in an adjusted EBITDA margin of 39%. Uniti Fiber net success-based CapEx was $21 million in the second quarter, which represents a net capital intensity of approximately 28%. We also incurred about $2 million of maintenance CapEx during the quarter. In addition to these stand-alone Uniti results, we also wanted to provide a pro forma view of new Uniti consolidated performance for the quarter. Slide 27 provides this pro forma view of new Uniti consolidated second quarter results. Consolidated pro forma revenue was down approximately 6% year-over-year during the quarter, primarily driven by the continued decline in legacy TDM services and in Uniti Solutions. However, top line growth in other parts of the business was strong with Fiber Infrastructure growing 7% year-over- year and Kinetic fiber-based revenue inclusive of consumer, business and wholesale services growing 19% year-over-year. As we continue to execute on and accelerate our fiber overbuild plan, we expect fiber services at Kinetic will continue to deliver consistent strong growth quarter-over-quarter. Please turn to Slide 28, and I'll now cover our 2025 outlook for the combined company. We have provided 2 views of estimates for 2025 on this slide. 2025 as-reported outlook includes 7 months of stand-alone Uniti results plus 5 months of combined Uniti and Windstream. This is our formal guidance for 2025 and matches what was included in our earnings release that was filed earlier this morning. We have also provided a pro forma view for 2025, similar to what we have provided in prior quarters. Both the as-reported and pro forma views for 2025 reflect the completion of the resegmentation work at Windstream that has been in progress over the past couple of quarters and also reflects how we plan to present the different segments going forward. The following comments on our 2025 guidance will be based on the as-reported outlook view. Beginning with Kinetic, we expect revenues and adjusted EBITDA to be $945 million and $385 million, respectively, at the midpoint. We expect to deploy $510 million of net CapEx at the midpoint of our guidance, primarily related to the continued build-out of fiber within the Kinetic footprint. At Fiber Infrastructure, we expect revenues and adjusted EBITDA to be $1.1 billion and $735 million, respectively, at the midpoint for full year 2025. Although we are no longer providing separate formal guidance for Uniti Fiber and Uniti Leasing, our 2025 outlook for both of those segments is unchanged from our prior guidance. Our outlook for net CapEx at Fiber Infrastructure this year is $310 million at the midpoint of our guidance and represents a capital intensity of approximately 30%. As a reminder, both Kinetic and Fiber Infrastructure consists of a highly predictable core recurring revenue base that continues to grow and yield attractive margins. Turning to Uniti Solutions, which we referred to in the past as Managed Solutions or Windstream Enterprise. We expect revenues and adjusted EBITDA of $320 million and $155 million at the midpoint. Altogether, we expect consolidated revenue and adjusted EBITDA of $2.2 billion and $1.1 billion at the midpoint of our 2025 outlook with consolidated net CapEx of $875 million. Using the legacy Uniti shares outstanding that is on the cover of our most recent 10-Q filing and excluding the impact of the warrants that were issued to Windstream shareholders as a part of the merger, total shares outstanding for the combined company is approximately 238.6 million. As we've mentioned multiple times already this morning, we are on a multiyear journey to overbuild the majority of the Kinetic copper network with fiber, and we are greatly accelerating and expanding that fiber build plan. Accordingly, Slide 29 lays out our key targets for Kinetic this year. We expect to reach 2 million homes passed with fiber by the end of the year, reaching 45% fiber coverage within the Kinetic footprint. We also expect to add approximately 530,000 fiber subs and realize approximately $500 million of consumer fiber revenue in 2025, an increase of roughly 25% from the prior year. In terms of cost per passing, Kinetic has historically achieved a cost per passing on strategic nonsubsidized bills of approximately $650. As we push fiber deeper into the Kinetic footprint and shift our construction mix to using more external crews, we expect the strategic cost per passing to increase, but to still compare very favorably to industry benchmarks. We estimate cost per passing going forward will likely be in the $850 to $950 range, giving us a blended cost of $750 to $850 per passing over the life of the fiber build program. Finally, I'd like to provide some brief comments on our capital structure. Slide 30 illustrates how Uniti's cost of capital has improved significantly over the past 2 years. If you go back to this time 2 years ago when we launched our 10.5% secured notes offering, our secured and unsecured debt was yielding over 12%. Fast forward today and our debt is currently yielding around 7% on a blended basis, a 550 basis point improvement in 2.5 years. Slide 31 provides an overview of our outstanding debt maturities. Over the past year, we have done meaningful work to extend our debt maturities, reducing our combined near-term maturities in '27 and '28 from over $6 billion a year ago to just over $3 billion today. Most recently, in June, we issued new unsecured notes using the majority of the proceeds to redeem a portion of our 10.5% secured notes due in 2028. Going forward, we will continue to be opportunistic in our approach to continue to push out near-term maturities and drive significant interest expense out of the business. I also want to highlight that yesterday, we successfully completed the steps to collapse the legacy Uniti and Windstream debt silos into one unified structure. Completing this debt collapse was a critical part of our strategy as it greatly simplifies our capital structure, unlocks significant opportunity for ABS on the Windstream assets and sets the stage for optimizing our combined capital structure going forward. Combined net leverage at the time of our merger closing is around 5.5x, and we expect to end the year with a combined net leverage of between 5.5x and 6.0x, consistent with the target we set for standalone Uniti. With that, we'd be happy to take your questions. Operator?

[Operator Instructions] Our first question comes from the line of Gregory Williams from TD Cowen.

The first one is just on, Kenny, as you move to the inference phase, how do the deal constructs change? I imagine it's a lot more lease- up, better margin, maybe lower upfront costs for you guys, but maybe there'd be more competition as well? And what would the yields be compared to the training data center yields? Second question is just on the funnel you mentioned. I think you said the wholesale funnel represents $1.5 billion of total contract value. What's your typical win rate on a funnel?

Good morning, Greg, good questions. I'll start with your second one. When -- and you specifically asked about the $1.5 billion of hyperscaler deals. And I would say, as we've said consistently over the past probably 18 months, our win rate when we go after a large hyperscaler deal is very, very high. We are being very disciplined about which deals we pursue. We're not looking to go after every single hyperscaler deal we hear about. We're not going after deals that are built out in the middle of nowhere that are not either contiguous to or strategic to in some other way, our network. We're very focused on deals that are either in an existing metro or near an existing metro or deals that connect our metro markets to others or that are relatively close to our network and give us the ability to expand it strategically. And so we're being selective on the deals that we pursue. And despite that, we still have a very sizable funnel, the $1.5 billion. I'm pretty sure that's the first time we've shared that number publicly. And when we go after those deals, we tend to win. And as I've said before, hyperscalers don't always pick the winner. In fact, I'd say, don't frequently pick the winner based upon price. They pick their winner based upon reliability, ability to build on-time and on-budget and on-spec. And I think, as I mentioned in our prepared remarks, being a scaled provider matters with them because I think they want a robust group of network providers to serve them, but not so long of a list that it's unmanageable. I think they like to have partners that they can go back to on a regular basis. So long-winded way of saying our win rate is pretty high. We haven't set a percentage, but I'd say it's very high. With respect to your first question, inference is exciting to us. It's more exciting than this phase that we're in now, frankly, with the hyperscalers. And we're doing lots of great deals. We're building lots of new network that we haven't been able to build in years. We're connecting metros that we've needed to connect over the years, and we're now using hyperscalers as anchor customers in order to do that, which is terrific. But where we're really going to start to see a pickup in recurring revenue and EBITDA is when the inference phase starts in earnest. And previously, we said that would probably be 3 or 4 years out, but I think that's increasingly looking conservative. It looks like it's going to be earlier and earlier. I also think it's going to be harder to predict what's inference versus not. I think AI work streams are getting more and more infused in all other work streams, and it's hard to distinguish between the 2, which is fine. But I think for us, what we really need is to have more distributed fiber endpoints that serve as on-ramps to serve that inference phase. And so we talk about our 3.5 million fiber homes, for example, and our 1 million-plus buildings, data centers and fiber and small cells that are on -- that are connected. And all of those things are going to, we think, see an improvement in demand as it relates to inference. And that's all coming from non-hyperscaler customers, by the way. So we're really looking forward to that. And to your question, Greg, about the types of hyperscaler deals that we expect to see going forward as it relates to inference, I think you hit it. You're right. It will be more lease-up as opposed to anchor/greenfield builds. And in fact, the deal that we highlighted and that Windstream signed last week at the end of -- right before the deal -- our merger closed, that's a lease-up deal. Very attractive transaction, 20-year IRU on existing infrastructure using existing strands with minimal capital and OpEx required. So very, very high margin and low capital intensity. And that deal came with, I think it was 296 strands, and there's a ROFR on incremental strands on top of that, which, by the way, is also exciting, right? Because as we've said before, we've got hyperscalers taking these very large strand count deals from us, and then they're coming back for the second deal. And in this case, this particular hyperscaler has asked for a ROFR on another 432 strands on top of the 296. Again, all lease-up. So I do think -- again, sorry for the long-winded answer, but I do think once inference really kicks into high gear, you're going to see higher margin, lower capital intensity deals coming from the hyperscalers and a lot of, we think, an improvement in MRR just across the base in general.

[Operator Instructions] Our next question comes from the line of Frank Louthan from Raymond James & Associates.

What is the time frame for the $1.5 billion funnel? What are those deals over? And then as far as the Kinetic build-out going forward, how much of that 20% of your footprint that doesn't have any cable competition is economical to build? And how much of the 40% penetration goal is reliant on being able to construct in that part of the footprint?

Frank, I'll start on both of those. And Paul, you might want to join in on the second one. But on the funnel -- first of all, I'm always a little bit reluctant to show funnel information because funnels ebb and flow by their nature. And in fact, if all you're doing is showing a funnel growing over time, but a pessimist point of view would mean that you're not selling enough on the other side, right? If it just grows and grows, -- so we don't like to show it on a regular basis, but we thought showing the funnel in this case made sense because we really want to show the theme of the funnel itself growing, but it's growing predominantly because the hyperscaler slice of the pie has gotten -- is getting very sizable. And in fact, at 40%, this is the first time that the first quarter where the hyperscalers have been the largest customer segment for us in the funnel. And so we really just wanted to show those themes. To your question, Frank, usually, when something is in the funnel, it usually takes something like 12 to 18 months for it to come out. I mean the sales cycle -- and it certainly could be a lot less, right? It could be anywhere from a month up to, I'd say, 12 months, maybe a little longer. And so -- but with this -- what's in the funnel today, the $1.5 billion, I expect that over the next 6, 12, 18 months, most of that will have worked its way through, but it hopefully will be regenerated by additional demand coming behind that. And we do see that. I think that what's in the funnel are actual deals that have been qualified by us and our customers, but we hear about much more in just private conversations, and we certainly think based upon public comments being made by the hyperscalers that there's just a commitment to investing in this space for years into the future. So very excited about that. With respect to the 40% of the footprint that doesn't have the so-called cable bundle and really just to your question in general about how much of the footprint is economical to get to, look, I think as we said, 3.5 million homes is roughly 75% of the footprint. And beyond that, we think we can get to a large percentage of what's left with fixed wireless or alternative technologies that are building off of that fiber-to-the-node investment over the years. And so I do think it's one of the real highlights of the Kinetic footprint that gets lost that -- while it is a rural footprint and it is -- the average market is less dense than a large metro, for example, there's a lot of fiber that's been pushed out into this network. And so that $650 to $700 cost per passing that we've talked about historically is real. And as Paul mentioned in his prepared remarks, going up to a blend of $750 to $850 on the build over the next number of years, we're getting to the less dense markets with that still very economical build based upon the historical fiber investment that's been made. And by the way, that also includes a blend of we're starting to work more and more with third-party contractors. Historically, we've done the vast majority of it in-house, but we're starting to bring in more and more third-party contractors to give us the ability to have a more predictable cadence and definitely an uptick in the build itself. So with all that said, Frank, we feel very confident about getting to 75%, 80% of the footprint with direct fiber-to-the-home and then the rest really serving it off of that fiber-to-the-node investment that's been made. So Paul, do you want to add anything?

Yes. Frank, it's Paul. I would just add that -- to specifically your question about how much of our build is focused on that portion of our -- of the Kinetic network without a cable competitor. That portion of our footprint tends to be very rural. And so it's certainly an area of our footprint where we're building fiber. That fiber tends to be more subsidized builds in nature. So it tends to be more RDOF or PPP or maybe even BEAD going forward. But it's definitely a part of the plan. And through those subsidized builds in those more rural areas of the footprint, we are able to build fiber, but it tends to be more of the subsidized projects that are in that category overall.

[Operator Instructions] Our next question comes from the line of Michael Rollins from Citi.

Thanks for all the details in some of these slides. I'm curious if we could turn back to Slide 28. And when you look at the pro forma for each of the new segmentations, Kinetic, Fiber Infrastructure, Uniti Solutions, curious if you could give us a perspective of aggregate growth for each of these pieces or in the case of solutions potential declines? And then how do you think about the multiyear progression of margin for each of those pieces? And then I have a follow-up on Kinetic after that.

Yes. So Michael, good question. I mean I think on our -- on the Fiber Infrastructure -- so on those segments from a top line growth standpoint, I think from -- on the Fiber Infrastructure business, I think we expect that to be very much in line with the Fiber Infrastructure business that Uniti has run over the years. So we're talking about there that kind of mid-single-digit growth on a go- forward basis on the top line and similar growth on the bottom line on the EBITDA line. So I mean, the Windstream wholesale business does have some legacy services, some TDM there that is being run off. So that does weigh a little bit on the growth there. But I would expect that sort of mid-single-digit growth with regard to that business on a go-forward basis. At Kinetic, that growth year-over-year, there's a little -- we've been doing some resegmentation, as you know, Michael. And so that's muddied the waters a little bit from a comparison standpoint. That should be much more stable on a go-forward basis. But we're reuniting all of the Uniti -- I'm sorry, the Kinetic Wholesale and Kinetic business into that Kinetic business segment, it's not just the consumer segment. So there's a little bit of TDM coming in there. So you may see that a little bit weighing on that Kinetic business more so than it was when it was just sort of isolated to the consumer business for Windstream more recently. But we would look to see that business really start to make the turn in the near future into a growth business as well as we drive fiber. So that kind of flat to low single-digit growth is what we're driving toward over the next -- the near-term period. And then on Uniti Solutions, I mean, Drew, do you want to jump in? We've got Drew Smith with us this morning as well, just on kind of the outlook for Uniti Solutions from a top line and EBITDA standpoint.

Yes. Thank you, Paul. Good Morning, this is Drew Smith. When you think about Uniti Solutions, today, there's still really 2 things kind of happening within that business. There's a large portion of the revenue that is our go-forward revenue really based on technology and connectivity when we're selling our managed services. But there's also a component of TDM that is being exited. As we've communicated at Windstream and we'll continue to communicate at Uniti, we will be fully out of the TDM business as it relates to Uniti Solutions by the end of this year. And so when you look at really kind of the go forward, we're still seeing some revenue losses, but good margin conversion as well as free cash flow conversion. I think right now, we're seeing revenue losses of around mid-teens. I think that should be similar in the near-term. Long-term, I think we see stability as we're really focused on supporting the customers -- the larger customers within that base.

And then just going back to the Kinetic Fiber business, the Slide 25. So the ARPU trajectory, from what I'm reading, I think that excludes the modem rental charge of $10.99. So when you add that back to the fiber ARPU, it suggests that you're over $80 of ARPU. I'm just curious if you could talk about the strength of ARPU, what is driving that all-in strength of spend from the customer? And how you see the opportunity to continue to grow that customer bill over time?

Yes, Michael, I'll start with that one. I think you characterized the slide correctly. I think you're reading it right. And I think you're right that we've got a very solid ARPU, and that's been growing nicely over the past number of years, feel great about that. And obviously, we consistently regularly comp that relative to our competition in the market. And when you do that, when you look across the cablecos and any other small cable companies or if there's an overbuilder, which there aren't very many in our markets. But when we compare across all those things and fixed wireless, we're right in line with where the competition is. So we're not -- we don't have ARPUs or pricing plans that are in excess of our competition. And I think what that really gets to is, these are markets where there is a little bit more pricing power for the providers in those markets. And we're, I'd say, taking advantage of that. But we also recognize that there is competition and over time, we've got to be mindful of that, and we will be. And so when we look out and forecast ARPU growth in our various IRR models and we sensitize those models, we're, I'd say, conservative with respect to our expectations there. And so we certainly don't want to give any forward guidance on ARPU growth at this stage, but I do think we're mindful that it's a robust number today. And over time, we expect that it will continue to be, but I think that we're also mindful that there could be some pressures over time. And ultimately, I think that when you think about how do we continue to grow that number, it's not just pricing power, it's also upselling customers to higher speeds. Today, I'd say, 20% -- maybe 25% of our base are actually taking max speeds that are available to them. And so we think that's a terrific upsell opportunity over time, especially as we start to get into the inference phase of AI, for example, and more and more people need higher bandwidth at their home.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.